The Fed has already announced two rate hikes within the first five months of 2022. This, along with the apprehensions regarding further hikes, has severely dampened investor sentiment over the past few weeks. According to Federal Reserve Bank of Cleveland President Loretta Mester, up to a 75 bps rate hike is still quite possible later this year.
However, Fed Chair Jerome Powell is still optimistic about a difficult but potential ‘soft landing’ against all odds. Therefore, mega-cap stocks with a versatile product portfolio and robust financials are estimated to withstand the short-term market fluctuations and help investors wade through the crisis.
It could be wise to bet on beaten-down mega-cap stocks Walmart Inc. (WMT) and Roche Holding AG (RHHBY), which are well-positioned for the long-term.
Walmart Inc. (WMT)
WMT engages in the operation of retail, wholesale, and other units worldwide. The company has three segments: Walmart U.S.; Walmart International; and Sam's Club. It is a leader in sustainability, corporate philanthropy, and employment opportunities.
On May 17, 2022, Doug McMillon, WMT’s President and CEO, said, “We’re adjusting and will balance the needs of our customers for value with the need to deliver profit growth for our future.”
For the first quarter ended April 30, 2022, WMT’s total revenues came in at $141.57 billion, up 2.4% year-over-year. Its total current assets came in at $83.22 billion for the period ended April 30, 2022, compared to $81.07 billion for the period ended January 31, 2022. Also, its long-term debt came in at $32.17 billion, compared to $34.86 billion, for the same period.
Analysts expect WMT’s revenue to be $610.91 billion in fiscal 2024, representing a 3.3% year-over-year increase. The company’s EPS is expected to rise 9.5% per annum for the next five years. In addition, it has surpassed the consensus EPS estimates in each of the trailing four quarters. However, in the past month, the stock is down 15.5%.
WMT has an overall A rating, equating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
In addition, it has a B grade for Growth, Sentiment, and Quality. WMT is ranked #6 of 38 stocks in the A-rated Grocery/Big Box Retailers industry. Click here to see the additional POWR Ratings for WMT (Value and Momentum).
Roche Holding AG (RHHBY)
Headquartered in Basel, Switzerland, RHHBY engages in the prescription pharmaceuticals and diagnostics businesses in Switzerland, Germany, and internationally. The company offers pharmaceutical products and in vitro diagnostics solutions for indications.
On April 25, 2022, RHHBY’s CEO Severin Schwan said, “As expected, we started the year with strong demand for our diagnostics base business, our broad portfolio of COVID-19 tests and our new medicines. I am particularly pleased about the progress we are making in developing our product pipeline, including positive new data in neurology as well as in severe eye diseases.”
RHHBY’s pharmaceuticals division sales for the 2022 first quarter came in at CHF 11.16 billion ($11.23 billion), up 5.3% year-over-year. Its diagnostics division sales came in at CHF 5.29 billion ($5.32 billion), up 22.1% year-over-year. Moreover, its group sales came in at CHF 16.45 billion ($16.55 billion), up 10.1% year-over-year.
Analysts expect RHHBY’s revenue to increase 1.2% year-over-year to $64.76 billion for the fiscal period ending December 2023. Its EPS is expected to increase 7.1% per annum over the next five years. The stock has lost 21.2% over the past month.
RHHBY has an overall B rating, which equates to a Buy in our proprietary rating system. In addition, it has an A grade for Stability and a B grade for Value and Quality.
RHHBY is ranked #15 of 166 stocks in the Medical - Pharmaceuticals industry. In addition, we’ve also rated the stock for Growth, Momentum, and Sentiment. Click here to get all the RHHBY ratings.
WMT shares were trading at $130.94 per share on Tuesday afternoon, down $17.27 (-11.65%). Year-to-date, WMT has declined -8.82%, versus a -13.91% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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